Musk takes legal action against to block OpenAI's conversion to a for-profit structure

Musk cofounded OpenAI with Altman in 2015

OpenAI argues for-profit move required for capital

to for-profit conversion unusual, professional states

(Adds judge did not decide whether or not to provide the injunction in paragraph 5, OpenAi's legal representatives' remark in paragraph 13)

By Anna Tong and Akash Sriram

OAKLAND, Calif., Feb 4 (Reuters) - A federal judge said on Tuesday that parts of Elon Musk's claim against OpenAI to halt its conversion to a for-profit entity might go to trial, adding that the Tesla CEO will have to appear in court and affirm.

"Something is going to trial in this case," U.S. District Judge Yvonne Gonzalez Rogers in Oakland, California, said early in the court session.

"(Elon Musk will) rest on the stand, present it to a jury, and a jury will decide who is right." Rogers was considering Musk's recent request for a preliminary injunction to obstruct OpenAI's conversion before going to trial, the most recent move in an animosity match in between the world's wealthiest person and OpenAI CEO Sam Altman that is playing out publicly in court.

Rogers did not decide whether or not to release the injunction Tuesday, however at one point suggested that Musk's legal team had actually not presented sufficient proof for her to release the injunction, tandme.co.uk and suggested she may hold an evidentiary hearing, where both sides might present witnesses and evidence. The last time Rogers offered an initial injunction remained in Epic Games' case against Apple in May 2021.

Musk cofounded OpenAI with Altman in 2015, but left before the business removed and archmageriseswiki.com consequently established the competing AI startup xAI in 2023. OpenAI is now attempting to transition from a nonprofit into a for-profit entity, which it states it needs to do to secure the capital needed to establish the very best expert system designs. Last year, Musk submitted a claim against OpenAI and Altman, stating that OpenAI ´ s founders initially approached him to fund a nonprofit concentrated on developing AI to benefit humankind, however that it is now concentrated on generating income. He later on broadened the claim to add federal antitrust and other claims, and in December asked the judge commanding the case to stop OpenAI from transitioning to a for-profit.

In reaction to Musk ´ s claim, OpenAI has said it will move to dismiss Musk ´ s claims and wiki.whenparked.com that Musk "need to be competing in the marketplace instead of the courtroom." The stakes on OpenAI's corporate shift have now intensified, as OpenAI ´ s last fundraising round of $6.6 billion and a brand-new round of as much as $25 billion under discussion with SoftBank are conditioned on the business reorganizing to eliminate the not-for-profit ´ s control.

During the hearing, OpenAI's legal representatives said the factor to enable OpenAI to become a for-profit entity is because it would be necessary to help with the objective of the not-for-profit.

Such a restructuring would be extremely uncommon, said Rose Chan Loui, executive director of the UCLA Law Center for Philanthropy and Nonprofits. Nonprofit conversions to for-profits have actually traditionally been for healthcare companies like health centers, not endeavor capital-backed companies, she said. (Reporting by Anna Tong in Oakland and Akash Sriram in Bengaluru, Editing by Marguerita Choy)